2016 (3) TMI 1459

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....s; "1. The directions of the DRP are opposed to law and facts of the case. 2. On the facts and in the circumstances of the case, whether the DRP is correct in directing the TPO/AO to provide freight subsidy where the figure of freight subsidy is not separately available in the annual report of the assessee company namely, Global Green Co.Ltd.., 3. On the facts and circumstances of the case, whether the DRP is correct in directing the TPO/AO to provide working capital adjustment in the case of assessee following judicial pronouncements in various cases which are involved either in SWD or ITES business. 4. For these and other grounds that may be urged at the time of hearing, it is prayed that the directions....

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....ous cases which are involved either in SWD or ITES business.  5. The learned counsel for the assessee on the contrary submitted that they have filed cross objection to the instant appeal of the revenue, however it was fairly submitted that it was just for academic exercise and do not want to press the same. 6. We have given our thoughtful consideration to the submissions of the rival parties and also relevant order passed by the DRP, as the DRP held in its order that "Having heard the objection, it is noticed by us, from the findings given in the paragraph 9.3 of the order of the TPO that the figures of the freight subsidy is not separately available in the annual report and therefore, in absence of such figure, the adju....

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....ference in time value of money between the tested party and comparable, since the difference will be reflected in profits. The underlying reasoning is that; a. A company will need funding to cover the time gap between the time it invests money (i.e pays money to suppliers) and the time it collects the investments (i.e collects money from customer). b. This time gap is calculated as the period needed to sell inventories to customers + the period needed to collect money from customers -the time period granted to pay debts to supplier.  Since assessee is a captive manufacturer selling products to its AE. The payment cycle in the case of assessee is shorter as against a considerable time lag in the case of compar....